Day trader

[Deleted member 4644]

According to wiki:

" Pattern day trader is a term defined by Securities and Exchange Commission to describe any trader who buys and sells a particular security in the same trading day (day trades), and does this four or more times in any five consecutive business day period"

Does this mean that if I buy VWO on Monday and sell it on Tuesday I can do that as much as I want and not be a day trader? What if then on Tuesday I bought AAPL and then sold it Tuesday?

What if I bought VWO Monday, sold it Monday and then bought QQQQ Tuesday and sold it Tuesdays?

 

[vi edit]

If you open a position, and close a position on the same day for the same security, it counts as a round trip.

If you open on Monday, and close on Tuesday, it does not count.

If you open a position on Monday, close it on Monday, open a second on Tuesday, and close a second on Tuesday, you have two round trips in two business days. You have one more freebie in the next 3 days. On the fourth you will be flagged.

 

[Lorax]

why does this matter, is there some tax barrier for day traders or something?

 

[mugs]

Originally posted by: Lorax
why does this matter, is there some tax barrier for day traders or something?

You have to have a certain amount of money in your account I believe ($25k)

Edit: if you're a daytrader

 

[vi edit]

It's to protect both the broker and the investor. You need a minimum equity requirement of 25k in your account to cover your actions.

Day traders have a lot more leverage (up to 4x buying power) to trade in and out of positions throughout the day. That's a lot of rope to hang yourself by.

 

[tweakmm]

Originally posted by: vi_edit
Day traders have a lot more leverage (up to 4x buying power) to trade in and out of positions throughout the day. That's a lot of rope to hang yourself by.

FOREX margins can get c.r.a.z.y.
400x is nothing to sneeze at.
I'd never deal with someone who offered more than 100/1. Everyone else is just praying on beginers.

 

[Syringer]

Originally posted by: tweakmm

Originally posted by: vi_edit
Day traders have a lot more leverage (up to 4x buying power) to trade in and out of positions throughout the day. That's a lot of rope to hang yourself by.

FOREX margins can get c.r.a.z.y.
400x is nothing to sneeze at.
I'd never deal with someone who offered more than 100/1. Everyone else is just praying on beginers.

But the volatility of even your slowest moving stocks are usually much greater than the volatility found in a currency pair..

I do agree though, the FX market is full of scammers and deals that are too good to be true.

 

[iversonyin]

Originally posted by: tweakmm

Originally posted by: vi_edit
Day traders have a lot more leverage (up to 4x buying power) to trade in and out of positions throughout the day. That's a lot of rope to hang yourself by.

FOREX margins can get c.r.a.z.y.
400x is nothing to sneeze at.
I'd never deal with someone who offered more than 100/1. Everyone else is just praying on beginers.

No way you get 400x margin at Forex. For a regular Joe, probably 20-50x. Unless you are back by a prop house who only want $10k risk capital.

 

[iversonyin]

Originally posted by: mugs

Originally posted by: Lorax
why does this matter, is there some tax barrier for day traders or something?

You have to have a certain amount of money in your account I believe ($25k)

Edit: if you're a daytrader

I believe you are right. The daytrade rules is that you have to have more than $25k. Or you get nailed for violation. Its a stupid rule.

 

[tweakmm]

Originally posted by: iversonyin

Originally posted by: tweakmm

Originally posted by: vi_edit
Day traders have a lot more leverage (up to 4x buying power) to trade in and out of positions throughout the day. That's a lot of rope to hang yourself by.

FOREX margins can get c.r.a.z.y.
400x is nothing to sneeze at.
I'd never deal with someone who offered more than 100/1. Everyone else is just praying on beginers.

No way you get 400x margin at Forex. For a regular Joe, probably 20-50x. Unless you are back by a prop house who only want $10k risk capital.

You are very very wrong. I can open an account right now with one grand that would give me 400/1 margin; 100/1 is standard. The real big fish who play with tens of millions trade on lower margin accounts like 20/1 or 10/1 and the real big fish play with 1/1 or 2/1.

 

[tweakmm]

Originally posted by: Syringer

Originally posted by: tweakmm

Originally posted by: vi_edit
Day traders have a lot more leverage (up to 4x buying power) to trade in and out of positions throughout the day. That's a lot of rope to hang yourself by.

FOREX margins can get c.r.a.z.y.
400x is nothing to sneeze at.
I'd never deal with someone who offered more than 100/1. Everyone else is just praying on beginers.

But the volatility of even your slowest moving stocks are usually much greater than the volatility found in a currency pair.

Quite true, hence the reason for the high margins. A currency pair barely changes a small fraction of a cent a day and at 1/1 margin that's not very exciting at all.

 

[chuckywang]

Originally posted by: iversonyin

Originally posted by: mugs

Originally posted by: Lorax
why does this matter, is there some tax barrier for day traders or something?

You have to have a certain amount of money in your account I believe ($25k)

Edit: if you're a daytrader

I believe you are right. The daytrade rules is that you have to have more than $25k. Or you get nailed for violation. Its a stupid rule.

Who is gonna nail you though?

 

[crownjules]

A lot of people see high leverage and are immediately scared. While the danger is quite real, if you are a halfway decent trader (you utilize reasonable stops) then it will never bite you in the ass since you limit your losses to pre-defined levels.

Also, the SEC regulation that stipulates a daytrader must have an account minimum of $25K only applies to trading stocks. You can trade commodities, futures, etc. with less if you so desire.

 

[iversonyin]

Originally posted by: tweakmm

Originally posted by: Syringer

Originally posted by: tweakmm

Originally posted by: vi_edit
Day traders have a lot more leverage (up to 4x buying power) to trade in and out of positions throughout the day. That's a lot of rope to hang yourself by.

FOREX margins can get c.r.a.z.y.
400x is nothing to sneeze at.
I'd never deal with someone who offered more than 100/1. Everyone else is just praying on beginers.

But the volatility of even your slowest moving stocks are usually much greater than the volatility found in a currency pair.

Quite true, hence the reason for the high margins. A currency pair barely changes a small fraction of a cent a day and at 1/1 margin that's not very exciting at all.

Yup, and they don't pay commission. Its a good game for new traders. Low volatility make up by high leverage. But if you do use the full leverage, you can get wipe pretty quick.

 

[iversonyin]

Originally posted by: chuckywang

Originally posted by: iversonyin

Originally posted by: mugs

Originally posted by: Lorax
why does this matter, is there some tax barrier for day traders or something?

You have to have a certain amount of money in your account I believe ($25k)

Edit: if you're a daytrader

I believe you are right. The daytrade rules is that you have to have more than $25k. Or you get nailed for violation. Its a stupid rule.

Who is gonna nail you though?

How about the SEC?